Posted by
TheRationalRight on Saturday, October 04, 2008 9:32:54 PM
I love all-you-can-eat buffets. If you could see my waistline, that wouldn't surprise you. Buffets are economical options from the standpoint of the consumer. I can pay a fixed price, and I can usually find at least one or two items in the serving line that are edible. Even my finicky kids can usually find something they can tolerate. Because the cover charge has already been paid, I usually get seconds, then eventually dessert. And I refill my drink several times as well.
"All you can eat for one low price." The buffet syndrome.
Americans have become enamored of this philosophy. For me, it started in college, when apartments advertised "all bills paid." I jumped at the chance to have these prices fixed. And since it didn't affect my rent, I kept the apartment as cold as I wanted in the summer and as warm as I wanted in the winter. Of course, the rent eventually increased as a result of this common practice, but I had moved on by then, so it only affected the next renter.
By the early 1980's, insurance companies had an extremely progressive idea. By encouraging people to go to their doctors more often, they reasoned, illnesses would be caught earlier, and claims filed for treatment of these illnesses would be drastically reduced. They called their idea Health Maintenance Organizations, or HMO's.
From the consumer's standpoint, this was a welcome concept. Rather than traditional policies with annual deductibles and complicated forms, patients merely needed to pay a token amount (around $5.00) when they wanted to visit their doctor. The HMO would bill the insurer and receive reimbursement directly.
What a brilliant and noble concept. Except it doesn't work because of the buffet syndrome.
When it costs $5.00 to go to the doctor, people go to the doctor more often. People who got the sniffles went to the doctor to make sure it didn't evolve into pneumonia. Accidents that could be fixed with a band-aid resulted in doctor visits as well to make sure gangrene didn't set in. As I stated previously, that's actually the basic premise of Health Maintenance Organizations, and patients used them for the stated purpose.
So rules have to be established. Insurance companies required their customers to identify a Primary Care Physician (PCP), who would act as a "gatekeeper" to govern all healthcare for the patient. For example, if a man needed an ingrown toenail cut out, he would have to first see his PCP for a referral. The PCP would gladly collect the copay from the patient and the remaining fee from the HMO, then the PCP would refer the patient to a podiatrist. The podiatrist would also collect the copay from the patient and the remaining fee from the HMO.
Getting an appointment with a PCP became a real chore. I often heard stories of people who had to wait more than a month for the next available appointment. Once they were able to see the PCP, there was an additional wait for an appointment with a specialist. The man with the ingrown toenail could end up with a bone infection by the time he was able to see the podiatrist. Costs to insurers climbed, so premiums for these policies rose while customer satisfaction sank.
In the meantime, the more traditional insurance policies evolved in order to compete with HMO's, resulting in Preferred Provider Organizations (PPO's). This was essentially a blend of traditional insurance and HMO's. Consumers could choose any physician in a network of providers (the PPO) for a set fee (around $25.00) for office visits. The man with the ingrown toenail could go directly to any podiatrist in the PPO for that set fee without involving a PCP. This allowed non-HMO insurers to stay in business, but their costs increased accordingly, and premiums increased as a result.
I happen to work for an insurance company, and my company sells health insurance. I can tell you that health insurance is not a profitable business. However, if we decide to stop selling a product that customers need, they will begin to choose a competitor for all their insurance needs. Our own employees are covered by a self-funded PPO plan with each year's premiums determined by the previous year's claims experience, and our premiums have risen each year -- because of the buffet syndrome.
From a strictly business standpoint, I'm sure my company would be relieved if the federal government provided insurance for everyone in America. We could simply stop selling health insurance. We would stop losing money on this product without worrying about losing market share on our other products.
However, a federally run health insurance program would look very much like an HMO. And we employees are also consumers of healthcare. We have seen the carnage caused by HMO's and the buffet syndrome, and we don't want it for ourselves.
Come to think of it, the last really satisfying meal I had was ordered from a menu at a nice restaurant.